Backing Cruise Could Be Risky Business

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During an internal presentation on film financing last year, Merrill Lynch & Co. executives entertained employees with the famous video of actor Tom Cruise manically bouncing on Oprah Winfrey’s couch as he sang the praises of his new girlfriend, the Wall Street Journal reports. Amid the laughter, recalls someone who was in the room, Michael Blum, Merrill’s head of structured finance, asked: “How does one hedge that risk?”


It’s a question many hedge-fund managers may be asking now that Mr. Cruise’s rich production deal from Paramount Pictures has been abruptly severed by Sumner Redstone, chairman of Paramount’s parent company, Viacom Inc. In the wake of the move this week, Mr. Cruise and his production partner, Paula Wagner, say they will finance future films with money raised from unnamed hedge funds.

But even as Mr. Cruise and others talk of winning some of that money, there are signs the trend is cooling, as Hollywood’s newest investors learn about the risks that for decades have dealt hard lessons to other would-be movie moguls.


Read the full Wall Street Journal story

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